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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue No. 11 - Evidence - December 7, 2016


OTTAWA, Wednesday, December 7, 2016

The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:20 p.m. to study and report on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

Senator David Tkachuk (Chair) in the chair.

[English]

The Chair: Welcome to the Standing Senate Committee on Banking, Trade and Commerce. My name is David Tkachuk, and I am the chair of this committee. Today is our ninth meeting on the subject of our study on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

I would like to take this opportunity to inform honourable members that yesterday the committee's motion to extend our reporting date on this study was extended from February 28, 2017 to May 31, 2017.

During the first part of our meeting today, it gives me great pleasure to welcome our former colleague, the Honourable Gerry St. Germain, P.C., who served in the Senate from 1993 to 2012 for British Columbia Langley—Pemberton—Whistler. During his time in the Senate, Senator St. Germain served as member of this committee, among others, including being Chair of the Standing Senate Committee on Aboriginal Peoples during a number of parliaments.

Prior to his time in the Senate, Mr. St. Germain previously served as a member of Parliament from 1983 to 1988.

In March 1988, Mr. St. Germain joined the Canadian cabinet, the first Metis to do so, as Minister of Transport Canada and was later appointed as Minister of Forestry.

Thank you for being with us today, Honourable Senator St. Germain. Please proceed with your opening remarks, after which we will go to a question and answer session.

Hon. Gerry St. Germain, P.C., former senator, as an individual: Thank you, Mr. Chair. What an honour to be here with my good colleagues that I respected, worked with and I miss all of you. I want to be honest about it. You guys were great.

I look at Lynn, the clerk, those that translate and those that work for us, all you great ladies in the back and the interpreters, thank you for just being who you are and what you did for me when I was here.

Good afternoon, honourable senators. As I have been introduced, I am Gerry St. Germain, a former senator from British Columbia, cattle rancher and businessman, but more famously known as a chicken farmer. And I'm also an Aboriginal person, a Metis son of Manitoba. I want to begin by thanking the members of the committee for the opportunity to appear here before you.

As some of you will know, I served 19 years in this place, as the chairman so adeptly pointed out, 16 years as a member of the Standing Senate Committee on Aboriginal Peoples, with seven of those in the chair.

Since retiring from the Senate of Canada at the end of 2012, I have been volunteering my time to assist First Nations in northern British Columbia on options that could facilitate their equity ownership in major projects that are proposed for their territories, which, by the way, if done properly is a good idea.

I will focus my remarks today concerning the implications that the establishment of a national corridor may have on some of the business interests of First Nations, based on my volunteer work in this area. The issues facing First Nations in dealing with major project development are complex and require a significant level of capacity and attention to resolve.

I think if we have learned anything from the last 20 years of landmark court decisions and the recent announcements by the Government of Canada on the approval of Kinder Morgan, Line 3, Pacific Northwest LNG and the rejection of Northern Gateway is that our current policy approach to major project development is not serving the interests of First Nations or the rest of Canada particularly well at this time.

Despite these cabinet approvals, there remains a lack of certainty that these projects will proceed. This lack of certainty is bad for industry, bad for First Nations and bad for the economic future of Canada. If we continue with the same approach, we will continue to get the same results.

The current policy mandate of central agencies, in my opinion, does not support the meaningful inclusion of the social and economic interests held by First Nations into the framework around the development of major projects.

So let me take this opportunity to be clear when I say that I do not view anything in the First Nations arena through a partisan lens or prism. I feel that it's got to be totally non-partisan.

It's clear to me that attempts by successive governments over multiple decades, including governments I was part of, to change Canada's policy approaches may have been well intentioned but have failed for a variety of different reasons.

Today, I see an increasing urgency to get things right and advance the process as we are running out of second chances to get things right. This urgency, in my opinion, transcends all partisan lines. Policymakers and legislators must work together and must act on the interests held by First Nations, and in doing so we must be willing to act in ways that enable the interests held by First Nations to become part of the solution.

New approaches must be focused on the goal of getting First Nations into business so they can be a participant in the economic mainstream of Canada and enjoy the societal benefits of meaningful economic participation. The current environment does not allow for this to happen and I believe it must change, the sooner the better.

I believe the current government, the present government here in Ottawa, has been saying the right things and setting the right tones for the generational change that needs to happen; but, my friends, the rubber needs to start hitting the road. We have got to get the show on the road.

Canada has at its disposal existing legislative tools that can be leveraged in order to begin the inclusion of First Nations interests in the policy framework around the development of major projects. One such tool is the First Nations Fiscal Management Act that has broad-ranging purposes to assist with financial management practices and to assist with the strengthening of business relationships between other governments, banks and industry. Honourable senators, the utilization of the purposes of this act should become a cornerstone consideration.

These services provided by this optional legislation through the three First Nations-led institutions it created are now being utilized by about 200 First Nations nationwide.

My volunteer efforts to assist First Nations in northern B.C. have been in tandem with the efforts of the First Nations Financial Management Board and the organization's executive chair, Harold Calla, who is sitting in the gallery here right behind me. He has appeared before you before. His sincerity, his commitment and his dedication are without question.

These efforts, at the request of a number of First Nations communities, have focused on options that would provide the access to capital required to take an ownership position through equity in proposed major projects. These communities have stated their interest in pursuing ownership in major projects and have established a capacity building tool in order to gain access to the technical information required to make informed business decisions. This capacity building tool is known as the First Nations Major Projects Coalition, which includes the participation of First Nations from the northwest coast to the northeast of B.C. I understand, as I said earlier, that this committee had the opportunity to hear from the First Nations members of the coalition at the end of October concerning the nature of their work, so I won't get into their details. I saw a playback of the tape, and I was impressed. I'm impressed working with these people. They are great people. Chief Joe Bevan was here as well as Chief Corrina Leween from Cheslatta, and Angel Ransom from the Carrier Sekani nations, just tremendous workers. The coalition represents an important step forward in how the next set of policy options are arrived at in Canada. The input and direction on a new policy framework must come from the First Nations, I believe.

Government cannot continue to rely on its own internal policy processes and expect innovative and different approaches to be produced. There must be a place for outside thought from First Nations who are directly impacted to influence policy decisions moving forward. The coalition represents a non-political, business-focused body with the ability to make this kind of contribution. Canada must be prepared to make continued investments in capacity building processes like the coalition if First Nations, governments and industry are to arrive at a better place on these issues.

At the same time, we must be prepared to embrace concepts like equity ownership in major projects as the likely outcome of increased investments in capacity. Ownership in proposed major projects is an important consideration on a number of fronts.

It has been my experience from travelling all over the north of B.C. and other parts of Canada for the past four years, talking to hereditary and elected leaders, elders, youth and the rank and file First Nations members in these communities, that the environment is their first priority. This I can't stress enough. I always thought it was just money and business. It's not.

I sat down with the elders. I sat in a room, and for about 20 minutes nobody spoke. I had my Metis vest on. One of them eventually came up and asked me about the vest, and it broke the ice, and then we got into what we wanted to talk about. They told me right off the bat that the number one thing is the environment. They told me the sad things about the social problems they have with youth, lack of respect, everything; but the environment was number one, as far as they were concerned.

First Nations want to approach the protection of the environment from a position of influence, and rightly so, I believe. I've seen firsthand what inadequate land use planning policy has done to First Nations traditional territory in northeastern B.C. where most of the LNG extraction takes place. That's in the northeast, by the way.

It is circumstances like these that have shaken First Nations' trust in existing Crown processes around major project development. It is through ownership in proposed major projects that First Nations stand to gain the most benefit in influencing the management decisions of a project and mitigating risk to the environment.

Senators, let me tell you, I flew for an hour and 40 minutes in a helicopter over what was once the most productive game area in the world. We were flying at 500 feet above the ground. We never saw a single moose. The only thing you could see was wolves — totally destroyed. This is the northeast. This is out of Fort Nelson. You see brown water left at these fracking sites. There's no brown water in the north, unless it's made by man.

Ownership through an equity interest would also provide the kind of revenue stream that First Nations communities need in order to establish economies robust enough to move away from the programs and services dependency on the Department of Indigenous and Northern Affairs. First Nations have negotiated equity stakes with industry on past projects such as the Pacific Trail Pipeline, the PTP. This project set the benchmark by offering First Nations a true and meaningful seat at the board table. The equity scenario in this project did not get off the ground because First Nations could not achieve the financing required and were either told that it was not possible or that the interest on the loan would be equal to the rate of return on investment.

Honourable senators, this example underscores the need for governments to be willing to work with First Nations to find innovative ways in which barriers to accessing capital can be removed on a scale large enough to facilitate their equity investment in major projects.

To do this, we should look at the way in which Canada's balance sheet and credit rating may be leveraged to assist through the provision of government loan guarantees.

The issue of equity investment by First Nations in major projects is not without its detractors. Some will say that equity brings too much risk to the equation for First Nations and that revenue sharing or deals focused on cash payouts are the answer to accommodate First Nations' interests. In my opinion, these alternative options do not provide First Nations with the opportunity to influence and represent their interests within the project life cycle.

And if we are to move beyond the status quo, First Nations must have options available to them that allow for this type of binding influence to be asserted and for them to possess the capacity to see it through. Major players within the gas and pipeline industry have told me directly the safest investment they can make with their money is in their projects, and they're right.

Any risk associated with equity purchases can be mitigated in a variety of ways. I can speak to this because I have lived in the world of business personally. I serve on a board of directors of a First Nations-owned company in Alberta. I know the type of decisions we make as a board, why we make them and what benefits it brings to that First Nation.

What happens if we aren't prepared to embrace these changes that are needed to enable a majority of First Nations to participate at this level in major projects? I ask you that question. Are we going to be able to create a policy environment where projects like a national corridor to facilitate trade and commerce can be built? That's another good question. The third question I have is: What do we want the economy and the social fabric of Canada to look like in 10 or 20 years?

It was 10 years ago during my time as Chair of the Standing Senate Committee on Aboriginal Peoples that the committee produced a comprehensive report focused on economic development. That report made a series of recommendations covering off many of the realities and challenges that I have spoken of today. A lot of contributions to that committee work were made by senators like Senator Dyck, Senator Sibbeston, Senator Patterson, Senator Campbell, who is here with us today, and others in this place who have believed and continue to believe in the future of our First Nations people.

While there have been incremental changes during this time, there has not been a willingness to create the kind of change necessary to get First Nations to the places they are asking to be and should be. These places are in the boardrooms making decisions, in the community building robust economies and social services, and out on the land protecting the environment.

Honourable senators, at 79 years old, going on 80, I will continue to volunteer my time to assist First Nations in B.C. and anywhere else in Canada in their efforts to achieve the capacity and tools required to make informed business decisions and to benefit fully from those positions. So long as the good Lord lets me continue, I will do that. But we must get to a point where the page can be turned on the historical impacts and general plight facing our First Nations people.

One such way to do this is to empower First Nations with control over their own futures by enabling them to assume their place in the economic mainstream of Canada. Our economic future as a natural resource dependent country depends on it.

I'm going to finish off by telling you a short story of when this young Metis ended up in British Columbia in 1966 with no money, three little kids and no furniture. I had to rent something, so I rented this wreck of a house from a German immigrant and a Dutch immigrant. We established a relationship, and the German gentleman said to me, "Frenchman, you got to have a house.'' And I had no capital. I had no access to capital. I am just an ordinary Metis and my wife is from an absolutely poor family.

The German credit union, Edelweiss Credit Union in Vancouver, gave me a 100 per cent loan and mortgage to build a house within six years. This was the mid-1970s. I was worth $360,000 because somebody gave me the chance, the opportunity to take an equity position in the economy of this country.

This is all our First Nations need, a break, and we haven't given it to them. We keep throwing money, programs, projects, everything, but it doesn't work, so we have to make a change.

I see people here that I've worked with for years. I see some new faces, which is good. Remember, folks, it's in your hands, an awful lot of it. Do the right thing, please.

God bless all of you. Thank you.

The Chair: Thanks, Senator St. Germain.

I want to follow up because we had a great presentation from the First Nations group in British Columbia. We all thought, and I believe I speak on behalf of all members, that it was very informative.

When we talk about negotiating with First Nations on major projects, what's been missing in this whole thing is that we need a partnership with First Nations. What has been problematic is that we don't recognize them as equal partners in a lot of these projects. That's a lesson for the corporate community as well, where they're not seen as equal players. I just want you to comment on that.

Second, how do you see the federal government guaranteeing equity or financial assistance? Would it be like municipalities receive? I know municipalities receive guarantees that lower their interest rates. All the cities receive guarantees, as Senator Campbell would know. I know in Saskatchewan that the government underwrites loans for all the cities in the province. Is that the way you see it?

Mr. St. Germain: In essence, but I'd want them to be good investments.

Pacific Trails Pipeline comes along. They are good investments. The return on those investments is guaranteed because there's a set rate. They're under the public utilities commission.

There's no question that we have to devise something at this level to deal with these people so they can get into it. But they're cognizant. It took me four years to get their trust and respect so I could sit down and have an honest chat with them.

They've told me that they realize they're short on capacity. They need help in that area. They'd like to manage their own things. That's why they want to go into partnership.

The biggest hurdle will be, as I mentioned in my delivery, some of these major pipeline corporations don't want to give it up. I said to them, "Do you mean to say that you're prepared to go on their traditional lands with your pipeline, but yet you're not prepared to share an equity position with them?'' They said, "No, we don't want to. It's the best investment we can make, and we want to keep it for ourselves.'' I said, "What if they don't let you go through?'' This is one of the lead guys of one of the bigger pipeline companies. I don't want to mention it here.

He told me straight up — Mr. Calla, who is behind me, was with me — "Oh, we're not interested.'' I said, "How will you go through?'' "We'll just go through; we always have.'' I said, "Don't try to come through my ranch, because if you try to come through my ranch and just bulldoze your way through, there will be trouble.''

These guys actually think that they've got a God-given right to go wherever they want, which they've done historically. Look at the poor people on Dollarton Highway. Senator Campbell knows about this. They were told to move their shacks off the area because they were coming through with the highway, and that's what they did. They went right through the reserve.

There are still people who think like this. That's the other thing. We have to get industry on side so that they realize the responsibility.

An example of a guy that's done it as correctly as possible is Ian Anderson, from Kinder Morgan. As the head honcho of that pipeline company, he goes right down and speaks to the Natives.

I'm not taking a position on Kinder Morgan or on Mr. Anderson, but I know he does that, and it makes a significant difference. He goes and deals with the people face to face, shakes hands with them and tries to make a deal with them. That's what we've got to start doing. We've got to start recognizing these people as capable.

The three people you had here, Angel Ransom, a young Native girl, brighter than bright; Corrina, the Chief of Cheslatta, very bright and capable of doing business; and Joe Bevan, I think, was the third one, another guy that recognizes we have to build capacity, and this is the only way we're going to do it.

Senator Ringuette: First things first: Gerry, we also miss you a lot. You were quite an inspiration.

The issue of the northern corridor and what we're looking at right now, hopefully, at the end of our study, will be to make a recommendation to fund the study, per se. That will be done at a university level.

From the get-go, as you indicated, you're talking about mostly equity-building, knowledge-building and all that. I think that this committee should insist that First Nations be involved from the get-go, at the start of this initiative.

I'd like to know, from your experience in regard to this kind of major project, what would be your recommendation in regard to who should be the First Nation participant in step one, which is the study?

Mr. St. Germain: Senator, that's why I'm here. There are other things I could be doing, like getting bucked off my horse like I did five weeks ago. That was not fun. There are other things I could be doing, but I want to be here.

The Chair: Is this as bad?

Mr. St. Germain: I was lying on the ground. There was a Jehovah's Witness praying over me. It was funny.

What excites me about this is amalgamation of the First Nations. I'm not the first on this. Premier Gordon Campbell, in British Columbia, suggested this before he left office, amalgamating the First Nations together. Industry now goes and picks them off one at a time, governments do this, and it's not the right way of doing things.

This is what the First Nations Major Projects Coalition does. They are coalescing, amalgamating as a unit. They have a steering committee, and the members that were here were the members of the steering committee.

It's organizations like that that you should be talking to, and you have, and I compliment you on that. That's why I'm so excited about what you're studying here.

By virtue of amalgamation, you get the majority. Out of about 38 bands, 25 have passed band council resolutions, where their membership is in favour of what they're doing. It's through amalgamation.

I think you're right, because most of this corridor will be going through traditional lands. Mr. Chairman, and all of you, I suggest strongly that you keep the First Nations involved and then there will be no surprises. You will be surprised at the quality of people out there. I have run into some real first-class people.

Harold Calla and I have worked together for 30 years. He was working on various other pieces of legislation that were allowing First Nations to opt out of the Indian Act, which is a good idea as well, because unfortunately, the Indian Act is so paternalistic that it doesn't let our First Nations think for themselves.

Senator Ringuette, I would say the amalgamation process, but keep First Nations involved. I think I mentioned in my delivery that it's critical.

As I say, we've got the ball starting to roll. B.C. has a lot of First Nations bands. They have over 260 of them out of about 630. These are approximate numbers.

We've got to start someplace. Every giant journey begins with a single step. Our step on the First Nations Major Projects Coalition is a small step, but it's an important one. You're at the stage in your study where you can keep First Nations involved.

Senator Tkachuk and all of us from the West, we know that this corridor, if it goes through, I'd say a huge percentage of it will be on Aboriginal lands.

Senator Black: Thank you for your contribution to this place and your ongoing work with this very important project.

Senator, you would likely not be aware, but just today the Transport Committee tabled a report that provides in one of its recommendations — and we only had I think eight recommendations in it — something that I know will please you. We have recommended that government, businesses and First Nations convene annually to review best practices to ensure that First Nations' engagement in pipeline projects is effective. This was tabled four hours ago. There's a clear recognition among that committee that best practices need to be employed to meet the objectives that you've so well set out.

That's by way of statement, sir.

I have a question for you, because there's a bit more learning hopefully we can get from you. I have two questions.

One, are you able to provide examples to this committee of where the approach you have described today has been implemented? If so, has it been successful?

The second question is a little more specific. With regard to the Northern Gateway project, which was rejected last week, many have suggested could have been a model for effective Aboriginal engagement. I understand there were 31 Aboriginal groups involved in an Aboriginal partnership that were economic stakeholders in the pipeline. Is there a model there that we should be considering as we do the autopsy?

Mr. St. Germain: As far as examples, Senator Black, I haven't got any that deal with government guarantees with First Nations. But I could defer to my partner and colleague Harold Calla from the Squamish First Nation, who is with us here today. I do know that the government guaranteed the Muskrat Falls project, and they guaranteed it to the tune of $6 billion.

I don't know if you're aware that Genworth, a corporation that guarantees mortgages, and the government guarantees 90 per cent of their insurance. That's an example of where the government has put up a guarantee. I don't think General Electric needs it as bad as some of our First Nations do.

Having said that, those are a couple of examples of where government loan guarantees have gone into effect. Most likely it's not as simplistic as I've described it regarding Genworth and the mortgage guarantee, but it shows that the government can do this.

I want to bring this up, seeing that you've brought this up, Senator Black. If anybody has a better idea — anybody, anywhere in the world — don't keep it a secret, because I will help in any way. I don't even want to be mentioned. As a personal example, I lived in a community, Senator Black, where there was nothing; there was no hope. There was no chance of ever going into business. You either worked as a labourer or a trapper, like my dad was. Even my dad said to me, "Gerry, you can't be a trapper, because they're destroying the environment.'' And they did. The muskrat swamps were drained for farm purposes and everything.

If you haven't got the capital or access to it, what can you start? In 99 per cent of the cases, you can't start anything, and that's why I think it is so critical.

Senator Wallin: Good to see you, senator. This is a chicken-and-egg question for the chicken farmer.

Mr. St. Germain: Have you got a turnip wagon that I can fall off of?

Senator Wallin: You have suggested, as many others have, that the Indian Act doesn't work and the programs don't work. We have endless evidence of this, but billions of dollars are spent. So if you and we have access to that money to encourage investment, equity partnership or to fund other levels of activities, including even the study itself, there probably is money in the system to do it, but how do we access it? Does everybody start giving up those things so that money can be turned over?

I know this is a tough question, but it's not that the money isn't being spent. So how do we make that effort to harness it and put it somewhere else? Because then you have to get First Nation groups across the country to say, "Okay, we forfeit, if it will come back to us the other way.''

Mr. St. Germain: First, it's through education. In my conversations with First Nations leadership, they recognize this. Right now, education funds go into the band pool. We put out a study when I was chair of the Senate standing committee that said that funding for education should be statutory. That means it goes only for education; it goes to nothing else. If you haven't got that provision in there . . . .

The other thing with education right at the present time with First Nations is that there's no standard. There are no school boards. There's no litmus test. I'll give you an example. The Dogrib in the Northwest Territories just outside of Yellowknife. They have a school at Rae-Edzo, close to Yellowknife. They have a very good graduation rate from that high school.

They have another community that's isolated. You can only fly in or go in on the ice in the winter. The failure rate is just horrific. Nobody really graduates. The other thing is that good teachers won't go there, but they will go to Rae-Edzo.

There are so many factors. There's the quality of teachers. There's the educational structure as a whole. You just can't throw money at something. If you've got a bucket of money in the house and everybody just grabs a handful and goes out, the next thing you know the pot is empty. It's got to be targeted.

That's why, with a steering committee like we've got, it's drawing out the quality people, like Angel Ransom who was here. They are the ones. We've got to take a chance.

When I was an air force pilot, I had an instructor. My first solo in a Chipmunk, I crashed — ripped the wings off. An instructor jumped in with me — one of the standard guys who tested us — and said, "I'm taking you up again.'' I said, "What do you want to do, crash another one?'' We went up again. He said, "I know what's wrong. Your instructor didn't let you fly the airplane. You can go through the motions, but if you don't know how to fly the plane and your instructor doesn't let you fly it and take the risk, you crash.'' That's the best analogy I can give you.

Senator Wallin: This is just a secondary point, because I know it's different in B.C. than in other provinces. The duty to consult means different things in different places. Do you see that as a veto?

Mr. St. Germain: No.

Senator Smith: It's great to see you, Gerry.

I have one question, and it's a simple one. How? Because when we had Mr. Calla with us, and the people in the group were very articulate and impressive, but when you're selling stuff, the first step of the selling process is how to relate to people and create trust. You've talked a lot about that.

I think what we would possibly need, and I need your input, is where do we start? Do we start with a project? Do we start in B.C.? How do we start and how do we build a relationship?

We need to know how they see it, for example Mr. Calla's group. If we truly believe we're going to empower First Nations people, we need to see what they think. They have to be confident enough to produce to us exactly what they think so that we can start the relationship.

When I worked with Ogilvie Mills, we went to Japan and it took us eight years to sell there because they didn't trust us. Once the Japanese trusted us, we blew the Americans away at a higher price. So the issue is how do we do it? How do we get the ball rolling? Where do we start? There are 640 nations, and that's the latest from Indigenous and Northern Affairs.

Mr. St. Germain: How do we start? I honestly believe that we are looking for a project now. We're going to try to start it as much as we can with the people we're working with in British Columbia. British Columbia is a hive of activity because of the natural resources in the northeast and in Alberta, adjoining Alberta, and it's got to be moved to market. It will be critical that First Nations are part of how it's moved there.

That's why I took an interest in northern B.C. I've always said, when I was dealing with First Nations as the chair of the Senate standing committee, we have to make certain that they are working together and that they're not working against each other.

I think what you saw here is the nucleus of the first step. We will find a project; I'm confident.

But you have to understand, senator — you don't have to understand, but it would be nice if you did, and you most likely will — that it took us four years and some.

Harold is part of the Squamish First Nation. He's an accountant by profession. His son studied at the London School of Economics. These two gentlemen that are in the gallery here, I've worked with them, and we have really had a tough time.

My former assistant that worked with me here is also working with us. I happen to be a volunteer, and I go in and I do certain things. But this trust thing, believe me, is not simple.

We had one meeting up North and the people wouldn't talk. I made a short dissertation on volunteering and all of that. They brought me to their table and they said, "You're volunteering?'' It was like there was something wrong with me. I said, "Yes.'' And they said, "Why?'' And I said, "It's because my dad was one of you. It's honouring my dad, my father.''

Senator Smith: It took us eight years to get the Japanese to buy our product.

Mr. St. Germain: So you know.

Senator Smith: We had times where we just sat and looked at each other. You evolve from that particular point.

Mr. St. Germain: We're working on a project.

Senator Smith: We need the "how.'' I would like to see from Harold a two-pager that shows how we'd like to progress. It could be tied into the corridor concept. The corridor concept, of course, is right away where you're going to get land, you're going to make sure you do all your geopolitics and your topographical maps, et cetera. But we need to know from the First Nations folks how they see it so that we can start it. And then, if we have the initiative, maybe we can find private partners and get a group together. Everyone says, "Let the First Nations people tell you.'' Well, tell us.

Mr. St. Germain: Mr. Chairman, do you mind if I bring Harold to the table?

The Chair: We don't mind at all. Harold?

Mr. St. Germain: Go ahead. They want a two-pager.

Harold Calla, Executive Chair, First Nations Financial Management Board, as an individual: We can give you a two-pager, but there are a couple of questions. You asked some very relevant questions.

Senator Wallin, we're not looking for government money. We want private sector money. We want a federal government guarantee loan for that. This is not going to be a burden if you go down this path.

There will be a need for some money to invest in capacity development. We are getting a lot of cooperation on that now. The important thing to remember is this approach is not a multi-billion dollar burden. We want to go to the private sector, the same place everybody else goes. We just need support to get there, the way Gerry got the support to buy his first house.

I want to talk about the wood fibre project because you've asked a really relevant question: How do you get there? Where do you start? I respectfully suggest there are two places to start. First Nations engagement in the environmental assessment process needs to be recognized, not as a policy matter, but as a legislative matter.

I told you before that the Squamish Nation undertook its own environmental processes and issued its own certificate. The matters that were important, as Gerry referred to earlier, about the environment being the number one priority in our communities were addressed in the agreement we had with the proponent. Squamish gained the right to determine which cooling system would be used in the LNG plant. We said, "You're not using Howe Sound because it's just recovered from the copper mine. You're going to use air. You're also not going to use LNG and put more hydrocarbons in the air. You're going to use electricity. You're going to move the pipeline. You're going to move the pumping station to deal with some issues.''

There are significant things that have to happen. I think the project is not insignificant but it's not huge. The economic, benefit-sharing agreement was reached. We got to that place. And, in the future, significant opportunities will flow to Squamish from those opportunities.

You don't have that opportunity in a $40 billion project. If you want to start somewhere, start with the federal government saying that for the right projects a loan guarantee is on the table.

Five years ago I went around the country with the Public Policy Forum to talk to industry and others about First Nation participation in major projects. Industry said if they were going to put equity on the table in any significant manner, it's got to be bought, not given.

So that's where we start, senator, to say, yes, there's going to be an approach towards environmental assessment that recognizes the legitimacy of First Nations as governments making decisions.

I will tell you that the Squamish process has resulted in a final investment decision by the proponent to actually build the plant and bring the natural gas there to ship overseas.

Senator Smith: Is that the LNG?

Mr. Calla: It's the only project that has gotten a final investment decision. It was done through the cooperation of the First Nation and the proponent and the province and the federal government for a period of time to stand down and let us do our environmental assessment process.

Senator Massicotte: Gerry, it is nice to see you again. In your presentation, you started off by saying the attitude is good but things are not going on the right track. You specifically referred to the approval of certain pipelines, but you also referred to the refusal of Northern Gateway. You seemed to suggest that that was a major negative for the First Nation, the refusal of that project. Is my understanding of that correct?

Mr. St. Germain: No, it isn't a major negative to them, but I think it was a political decision that was made. I've been there; I've sat at the cabinet table trying to make these decisions. Hopefully you're making the right one.

There's no question that it would be nice to be able to move product from Alberta and Saskatchewan out to the coastal waters.

Senator Massicotte: You're talking as a good Canadian now, but you said that the rejection of the Northern Gateway shows that our current policy approach to major project development is not serving the interests of First Nations. Why is the rejection of Northern Gateway not serving the interests of First Nations?

Mr. St. Germain: Well simply because it reduces another opportunity that, I think, in some ways, they could capitalize on.

Senator Massicotte: But the First Nations really didn't support the project.

Mr. St. Germain: Well, there are some that do and some that don't. That's a real political hot potato, Senator Massicotte, and we could go on for quite a while as to who is there.

I know that one of the larger bands in the northeast is really in favour of having it go through. To them it's a negative because they want it to go through. I'm not going to mention their names here because I don't want to get into the politics.

Senator Massicotte: That is a complication. There are some other groups. Some countries are that way, where there's no one spokesperson that can make it happen and represent. But that's not the case. The reality is that I think in this case you have 14 bands; 10 are saying yes and 4 are saying no. It's complicated, but I guess there's no solution to that.

Mr. St. Germain: Well, no, but eventual amalgamation, education — if the industry comes up with a bulletproof — 100-year pipelines can be put in the ground. It's just a matter of cost and profit, but if they were forced to the table —

Listen, we can put men on the moon and things on Mars. I'm sure that they can build a pipe that will last for 100 years. By that time, we will mostly be out of the fossil fuel business anyway or maybe right out of business, who knows.

Senator Tannas: Senator, good to see you again, as always.

Mr. St. Germain: Nice to see you.

Mr. St. Germain: I want to pick up on what Senator Ringuette was talking about. I think we are coming towards what our recommendation is likely to be, and it's to recommend the ask we got initially from Jack Mintz and the School of Public Policy to do a significant study. We have an interesting idea and not much more than that right now, and we have a book that's 50 years old from a general who is still alive who kind of got this going.

So a study of some significance needs to happen to even get to the next level. But equity in this study, who will do it and what perspectives are they going to touch on?

When we had Harold here before —

Mr. St. Germain: He's still here.

Senator Tannas: No, but when he had the microphone all to himself.

Mr. St. Germain: Well he can have it all to himself.

Senator Tannas: He talked about how First Nations and groups like the major projects initiative and, potentially, the First Nations Financial Management Board, et cetera, could play a role in this initial study. I'm very much aware of that and I think others are as well.

My question is who else should be involved? If we're going to make a recommendation that talks about the University of Calgary and the School of Public Policy, who have been the initiators of all of this, frankly, the major projects coalition, I would assume we would want to have some industry group from all of the various potential users of a corridor, and then we have to figure out who will fund it or what recommendation. Do you have any thoughts around that? If you wouldn't mind letting Harold chip in too, that would be great.

Mr. St. Germain: I'll defer to Harold.

Senator Smith, you were talking; I'm a salesman.

Senator Smith: Me, too.

Mr. St. Germain: I've always surrounded myself with people smarter than me, and in most cases that's easy. So I have a guy smarter than me with me today.

I'm happy that you're here, Harold, so if you want to take a run at Senator Tannas's question, please do.

Mr. Calla: Thank you, I think.

I think we need to have organizations like the BC First Nations Energy & Mining Council. We can't ignore the political wings. We need technicians.

We're talking about doing a study, but how are the terms of reference going to be developed? How do you get the participation of First Nations in a study? Part of the reason we talk about some of the more fundamental issues on major project development is because there is a history of resource development taking place within our traditional territories and no benefit coming to First Nations.

I always remember the late George Watts, from Nuu-chah-nulth, saying — and I said it here before — "I just want some of the trees that go by my front door, Harold.'' Well, if you want an approach to be considered by First Nations across this country, they have to know what is in it for them. They have to know there is potentially something in it for them at the end of the day. Some of these more fundamental questions are going to have to be considered, because we do not want to have the situation occur again where, "Okay, here, Indians; here's the study. We've done the work; here it is. What do you think? How's that?''

Senator Smith: That's why I asked you for the two-pager, Harold.

The Chair: Senator Tannas, could I go to Senator Day now? I just want to clean this up.

Senator Tannas: Sure.

Mr. St. Germain: Don't we have to get out of here?

The Chair: You could ask Mr. Rae; he might be able to answer some of these questions.

Senator Day: I will just follow along, if I may, from the discussion that Senator Tannas was leading you to. Our study is not on First Nations generally, but is there — and I think there is, but we'd like you to say yes — a role for First Nation communities across Canada in relation to this study of a corridor across Canada?

Are you aware of any comparative that looked at Aboriginal peoples in other countries that were involved in a similar situation? We hear of Australia and New Zealand being very progressive in dealing with their different communities. We did hear from one witness talking about Western Australia, north to south, down to Perth, and the role of the Aboriginal people in relation to that corridor.

This is not something where we put a bulldozer in and build all at one time, but it's a concept that if there is need or if there is development somewhere in the vicinity of this corridor or in it, the rights-of-way, the environmental impact, a lot of that will have been done. Isn't that where there is a role to play right now with respect to the First Nations in terms of rights-of-way? Because that's worth something. If you're giving up a right-of-way and you're promised that, if there's a development, it can happen here, then that's worth getting compensated for and getting a partnership in relation to whoever is doing the development.

Mr. St. Germain: No question as far as I'm concerned. Most of the area that you are going to go through will be traditional lands.

Senator Day: Exactly.

Mr. St. Germain: So they have to be partners.

We live off of our natural resources, as Canadians, to a vast degree, and that is the only conceivable way that I can see that First Nations can truly share in it.

Senator Day, they have to be part of it. If it's organized with them right from the beginning, then it has a chance, but they have to be there at day one.

Senator Moore raised something with me: Why aren't more First Nations on boards? I went to a mining conference in Niagara Falls. We were talking, and I asked the industry people who were there, "How many First Nations people have you got on your advisory board?'' Nobody lifted their hands. Then I asked, "Board of directors?'' Nobody lifted their hands. I said, "You have none on them? Yet they are all here. You want to go on their lands and you haven't got enough respect to even put some of them on your board of directors? Some of them are a heck of a lot smarter than most of us, and you.'' That answers your question, Senator Moore.

Thank you, Mr. Chairman. Sorry to prolong the process.

The Chair: For the Banking Committee and for me in particular, this whole question of the corridor has been really interesting. As far as I'm concerned, the First Nations should always be on the agenda of the Banking, Trade and Commerce Committee because that's who we will have to be doing business with in the future. Thank you very much for your presentation

And thank you very much, Mr. Calla, for bailing out Mr. St. Germain. It's very much appreciated.

It gives me great pleasure now to welcome the Honourable Bob Rae, P.C., O.C., Q.C., appearing as an individual. Mr. Rae is currently a senior partner at Olthuis Kleer Townshend LLP. He is working with the First Nations across Canada as legal counsel, adviser, negotiator and arbitrator.

Mr. Rae was elected 11 times to the House of Commons and to the Ontario legislature between 1978 and 2013. He served as Ontario's twenty-first premier from 1990 to 1995, and as interim federal leader and foreign affairs critic for the Liberal Party of Canada from 2011-13.

Mr. Rae graduated as a Rhodes Scholar from Oxford University in 1971 and the University of Toronto law school in 1979. He was named Queen's Counsel in 1984 and was appointed to the Privy Council of Canada in 1998, named as Officer of the Order of Canada in 2000, Companion of the Order of Canada in 2016, and received the Order of Ontario in 2004.

Mr. Rae, thank you for being with us today. Please proceed with your opening remarks and then we'll get to a nice question and answer session. We've got about an hour.

Hon. Bob Rae, P.C., O.C., Q.C., as an individual: Thank you very much, senator and senators. It's very good to be with you. I appreciate the invitation and the chance to share some thoughts.

I had the advantage of listening to much of the testimony of former Senator St. Germain as well as Harold Calla, with whom I have worked on a number of occasions.

Perhaps I can keep my remarks fairly short — I'm sure this will come as a relief to all of you — and have a good time for a dialogue, because I think many of the questions Mr. St. Germain raised are really important and his perspective is extremely important.

I just want to make a couple of basic points. First, I think we have to have some really quite deep historical appreciation of the fact that much of the development of the country that has taken place has not been to the benefit of the First Nations people of the country. We need to understand that if we look at the great resource developments that have taken place over the last 150 years, in most cases the First Nations have been on the margins of all that development.

We now have both the opportunity and, I would argue, the obligation, and in part the legal obligation, to ensure that the next round of major development doesn't happen without the full participation of the indigenous people of the country. That is the challenge ahead of us as a country.

Obviously I have clients, but I'm not here to represent any of them. I did actually have the opportunity to serve for two and a half years as the chairman of the organization known as the First Nations Limited Partnership in British Columbia to which Mr. St. Germain referred. There we brought together 16 First Nations to sign essentially a partnership agreement between the member First Nations and two companies, Chevron and Apache, for a natural gas pipeline that would go from northeastern British Columbia and northwestern Alberta — basically along the corridor, along Highway 16, to Kitimat. That project has received environmental approval from the Government of British Columbia. It is, in a sense, ready to go, but there has been no final investment decision from the companies involved, for a lot of reasons — essentially reasons having to do with market conditions and with the impact of the fall in the price of oil and natural gas. So I could talk, if I was asked a question on it, about that experience.

The other thing I want to say is that we need to understand that as a result of the Supreme Court decision that was made in the early 1970s known as the Calder decision, there is in government policy a significant difference between how treaty territories are treated as opposed to non-treaty territories. The conclusion in the Calder case, without being too professorial, was if you didn't have title and you didn't have treaty that gave you title, you needed to know that you were entering into an area of uncertainty and that, therefore, there needed to be a negotiation. That's what's produced the B.C. land claims decision and the Haida treaty, because the Haida was the origin of the Calder case. It's what also produced the James Bay treaty, which is a significant example that I think the committee needs to look at as to how a mid-Canada corridor. It is really what the James Bay treaty was all about. It has had a transformative effect on the people in northern Quebec and how, if I may say so, the treatment and condition of the people in northern Quebec is significantly different than the treatment and condition of the people in northern Ontario, where I continue to do a lot of work.

We need to understand that the federal and provincial Crowns have interpreted mainly the numbered treaties that go from 1 to 11 across the country, and include, senator, your province of Saskatchewan, my province of Ontario, right through Alberta to northeastern British Columbia in Treaty 8. The Crown has interpreted the treaties as basically giving them title and allowing them to develop virtually at will. Up until the Supreme Court decisions of the 1980s and 1990s and the first part of the 21st century, the Crown was able to move ahead without anyone challenging what the Crown and companies were doing.

So we built railways and huge mines in Sudbury and vast forestry projects, and they all took place because the Crown said, "Sure, you have a licence; go ahead.'' It's only in the last 25 years that we've begun to see a response from the First Nations saying, "Wait a minute; we didn't surrender anything.'' There's this strong difference of opinion between the First Nations and the Crown as to what exactly the meaning of the treaties and the treaty relationship is. That's still a matter of contention and potential litigation and needs to be dealt with and understood.

There will be a lot of argument about what exactly the Supreme Court has said about the duty to consult. What is the legal impact of the United Nations Declaration on the Rights of Indigenous Peoples?

Rather than looking at this as a purely legal issue, essentially we need to look at it as a policy and political issue and understand that the implication is, clearly, that development can't really take place without the participation and direct engagement — and I think the phrase "partnership'' was used — with First Nations people.

If you look at what's happening on the ground across the country, it's quite transformative and enormously encouraging. We're seeing the creation of more Aboriginal businesses than ever before. We're seeing a higher rate of participation in higher education than ever before. We're seeing a real difference in how First Nations people are engaging with the resource sector across the country. You could go province to province and say that compared to where we were 25 or 50 years ago, we've actually moved the yardsticks a fair bit.

However, we face a challenge, as I've said. Part of the challenge is of public policy's own making. Senator St. Germain referred to this: The Indian Act has had the impact of dividing First Nations between themselves. It's very difficult to get groups of First Nations communities to work together on projects because for 150 years they've been told, "No, this is your corner here. You stick with this corner, and they will stick with that corner.'' The negotiations between governments and companies and the different communities are not transparent. It's not something where people know what's been agreed to by one group as opposed to another group. So through tribal councils and regional organizations and treaty organizations, we try to create more cooperation and more commonality. It's a challenge, but it's essential; it's what we have to do. Increasingly, the First Nations are recognizing that, and people are seeing the benefits that can come from, if I may use the phrase, a more collective approach to try to negotiate community benefits for everyone.

We have the problem of the interpretation of the treaty. We have the problem of the Indian Act. If we wanted to, we could just sit back and say, "Well, let's just see what happens,'' and incrementally little things will take place. Yet, there is a frustration out there that in the absence of a stronger approach by the provinces and the federal government — and we haven't heard enough in this discussion about the role of the provinces, which is extremely significant, because, as everyone knows, provinces have jurisdiction over natural resources.

The federal Crown, bluntly put, is not the essential organization at the table; it's the provincial Crown. In all the significant Supreme Court decisions, the provincial Crown has been just as much involved in granting timber licences and doing things that need to be dealt with by the courts.

I guess my comment is that one very useful focus of study would be how to create the conditions for partnership and who has to be at the table. Basically it has to be the federal and provincial Crowns, both governments; it has to be the First Nations, and we have to figure out how to get that representation. Who represents whom? We have to appreciate that the representation will be varied and different across the country. It's not an easy tapestry to describe; and obviously the private sector, because of their interest in development and their concern about the certainty of investment and how they're going to go forward in the absence of clarity.

It's fair to say that the situation is complex enough now that it does require the governments to be more prepared to participate directly in resolving them.

I'm now involved very directly in a negotiation in the province of Ontario between the provincial Crown and nine First Nations who surround an area known as the Ring of Fire, which is an area of what I would call mineral potential. I'm not a promoter, although some Ministers of Finance, provincially and federally, have said it's worth $65 billion or $100 billion or whatever it might be. Right now it's all in the ground, and the means of getting there are difficult because it's more of a bog than dry ground; so you have to figure out how to build the transportation infrastructure that will get us there.

We need to understand that of the nine communities, four of them have road access. Five of them are remote communities. The remote communities face all of the challenges that remote communities face: challenges with education; the condition of the people; the residual and powerful impact of the residential schools disaster; severe issues with prescription drug addiction, which are now affecting communities like wildfire, and people are dealing with that issue all the time. And yet there's potential and interest in development and breaking a pattern of very tough conditions which has been in place for a long time.

The First Nations that I represent are not opposed to development. They are determined that they will control the investment, that they will have a lot to say about what happens, and that they will be participating as equal partners with the province in engaging. We're now currently trying to encourage the federal government to participate in their role in terms of their underlying obligations under the treaty and their own legislation in the Indian Act and elsewhere for the conditions on reserve.

This is a huge challenge. It's just one example. You could look at hydro development in northern Manitoba, mineral development in northern Saskatchewan, oil and gas development in northern Alberta. In each case, we need to understand that we don't have the institutions of governance in place to allow people to control their own development.

The one thing that's missing in the discussion that I heard earlier with Senator St. Germain is there has to be some agenda that looks at self-government and at creating the conditions for self-government in ways that actually will allow First Nations people to make decisions and to arrive at decisions which they have a say in controlling.

If you look at the James Bay Agreement, you will see that it wasn't one agreement; it was three separate negotiations over a 20-year period that have now led to a greater degree of self-government in James Bay than has ever existed.

Since the Calder case, we've been through a period of extensive negotiation in Yukon, Northwest Territories, the creation of the territory of Nunavut, a whole effort that's now being made in Labrador with respect to the Innu and the Inuit to exercise greater control over their resources. That's a process that the treaty provinces have been excluded from. In the treaty provinces, there is no process under way now that provides for self-government; none. So we have this condition of really stalled, not only economic development, but political development. I think Mr. St. Germain said it clearly: If you don't let people drive the plane, you're not going to get the engagement that you're looking for.

I think this is really where we're seeing, in the debate that's occurring in the First Nations communities, a frustration that says, "Give us the means to get into a discussion about self-government, because right now we don't have the means to do that.'' It's not just an economic question, because it relates to health care and education and other things. People are saying, "Give us more control over these things and let us participate more directly in improving our own conditions.''

I think that's where I'll stop, and I'm happy to answer any questions. I really do appreciate the chance to come to the committee.

The Chair: Because I cut you off, Senator Tannas, you will go first.

Senator Tannas: Thank you very much for your observations. I know others will have questions about what you've talked about. I'd like to take a little different tack.

You're a statesman and you've led governments. We have an interesting idea that we are examining here. We need to make recommendations, either to forget this or to move to some kind of a feasibility study that still will be very preliminary.

What would you be looking for if you were the Prime Minister and the Senate Banking Committee came up with this crazy recommendation for what is an incredibly grand scheme for a right-of-way for rail, road, electricity, fibre-optics and pipelines to run from one side of the country to the other? Could you, number one, tell us what you'd be looking for and give us some advice there? But also, what do you actually think of the idea? Is it crazy? Is it the next grand scheme for us? What are your thoughts?

Mr. Rae: First of all, on the idea itself, I don't think it is crazy. I think it's complicated, however.

The Chair: That's what we're finding out.

Mr. Rae: What you have to look at is: How do we do this in manageable bites?

If I wanted to say it's crazy, I'd say, look, all the provinces have control over natural resources, hydro, broadband and everything else. They're not at the table. You've got to get the First Nations involved because their legal situation and their constitutional position have changed substantially over the last 50 years in terms of recognition by the courts and the political realities that that has now created. You don't have any kind of consensus on how this will be done. You've got a lot of environmental issues and you're going to have a whole series of people who will be raising those questions.

None of those should deter you, in my view, from saying that we need a more comprehensive approach to the way in which development will take place in a vast geography of the country that is still claimed as traditional territory by the First Nations people of the country, and has a benefit not only to them but the potential development has a benefit to the whole country. So how are we going to do this?

I think you have to break it out in pieces and say, "Okay, let's look at it.'' None of it will happen without the provinces. You're not going to develop northern Ontario without the Province of Ontario. As a former premier, I can tell you that, and the same thing is true across the rest of the country. The question then becomes: Can the federal government, using a study like this, bring people together? How can this be done?

Part of it will be in response to what First Nations will put on the table, part of it will be in response to what the provinces will bring to the table, and part of it will be in response to what the private sector will bring to the table. But you can't do this without creating a much bigger partnership than now exists.

The provinces can't do it on their own. They sometimes think they can, but they can't. The First Nations need partners in order to be able to develop stuff, although they do want, in many cases, to develop things. And the private sector will have a view about what's involved, and I think you've got to do it with all those partners together.

Senator Massicotte: Honourable Bob Rae, I want to take 10 seconds to thank you. You've served Canada in many roles and you've done so very well. You're one of the most highly-appreciated statespeople, and you do it in the interest of the country, for Canadians.

Mr. Rae: Is this on tape? I just want to make sure of that.

Senator Massicotte: We very much appreciate it. Thank you very much. I think we all feel the same, no matter which stripe we wear.

There are so many questions I have further to your discussion, but could you simplify things for me a little bit? When you negotiate something, everything starts with determining your position of power and your leverage. Describe it to me in a simple sense. I'm always told that lands that have treaty rights are so much simpler to manage than what you see in Western Canada, where that doesn't exist and you have to establish the history and patterns and so on. Tell me how you see it evolving. What would you like the Aboriginal community to be viewed as? It's not a community; it's not a municipal or a provincial government. Is it equal to the federal government? Do they have ownership rights? Could you make it simple?

Mr. Rae: The simple answer is that it's not that simple because it's a contested area of law and practice. But having said that it's contested doesn't mean that it is not resolvable.

When I speak to First Nations elders, let's say, in northern Ontario and ask them to describe their understanding of the treaty — Treaty 9 is the one that was signed — they say the treaty is a document about sharing. Their main argument for saying that they didn't surrender land is that they don't own the land. They say, "Nobody owns the land. We're stewards of the land. We're keepers of the land. And we can't transfer ownership of something we don't actually own.''

The concept of fee simple is not an indigenous concept. The concept of traditional territory is a territory that you use because your ancestors have always used it. You fish, you hunt, you trap and you have access to the land. It belongs to you in that sense. And there are families that say, "That's our territory and that's your territory over there.'' But it's not a concept that lends itself to saying, "and therefore we surrendered this land.''

However, the treaty commissioners who came from Ottawa — and in the case of Treaty 9, from Queen's Park as well — clearly were under instructions to get the surrender because we needed the right-of-way to put the railway through and had to start doing logging and mining, so they had to get that surrender. They have the written document that says "surrendered.''

But the First Nations have a very powerful case to say, "If we surrendered all that land, what did we get for it?'' You look at it as basic contract law and say, "Well, you didn't get consideration for what you gave up.'' Nobody would look at that contract and say, "That's a good deal; you got a great deal.'' You get to live on a little reserve that's nowhere near the lands that you think of as your traditional territory. Your ownership is restricted to that, and you don't even own that. It's owned by the Crown and the Crown has an honourable obligation to hold it in trust for you. We're going to take your kids away from you. Here's the deal. So you sort of say, "That can't be the deal.'' My argument has been that we can either spend the next 25 years going up and down the courts to find an answer.

My other view is that this is fundamentally about the honour of the Crown and how the Crown establishes its honour when the Supreme Court of Canada has said very clearly that you can't engage in sharp practice. The honour of the Crown means you have to behave honourably toward the people with whom you're dealing. I don't think you can take the old interpretation of the treaty and say it's the most honourable interpretation we can come to.

We have to recognize that this is a traditional territory in which the First Nations have a clear interest and in which the Government of Canada and the Government of Ontario have interests. People who are seeking to develop things say, "I'd like to develop this.'' You say, "Okay, isn't there something that can be done here that gets us to a better place?'' I think that's really part of what's going on across the country: People are engaging in this.

The one thing that Senator St. Germain said that I really agree with strongly is that the key — and Harold Calla said it as well — is coming back to this notion of stewardship of the land. The reason the environmental assessment issue was so important for the First Nations is because they do see themselves as having a critical role in preserving the quality of the land and the water. That hasn't been done very well by previous governments, so you've got to ask how we do that better. How do we do that in a way that will make you feel that you actually have a role in protecting the development and seeing that the development is not happening in a way that's an affront to your sense of environmental stewardship?

I have to say this as well: There will be and there are First Nations groups and other groups in society — environmental groups and others — that are opposed to certain developments. They're just going to be opposed to them because they say there's no way you can do this without causing other difficulties.

There are also a lot of First Nations and others that say, "Provided we can find the right ways and the right terms for this, we're not necessarily opposed to the development taking place. Under certain conditions, it can take place.''

Senator Massicotte: You talked about treaty lands. How does that change relative to non-treaty lands?

Mr. Rae: With the non-treaty lands, the governments take the view that they now have no choice but to negotiate. Why do we have a James Bay Agreement in Quebec and a different arrangement in Manitoba? Because the Crown has interpreted the treaty in a certain way and because the Supreme Court of Canada basically told the Government of Quebec and the Government of Canada, "You think title has been transferred in northern Quebec but maybe it hasn't been, so what are you going to do?''

Senator Massicotte: What are your thoughts on equity?

Mr. Rae: Equity is one form of participation. I don't disagree with Senator St. Germain that it has some important symbolic and economic advantages to it. I don't believe it's the only means by which people can participate in the development of a resource.

I believe it shouldn't be ruled out, if that's something that people want. But if you're looking at the mining sector, for example, that's a very high-risk investment. It's very different from a utility pipeline. But if a mining promoter comes into a community and says, "You can become investors in my deal,'' keep your hands in your pockets. You have to be careful about these things.

My view is that First Nations governments are governments. What do governments need to do their job? They need a steady stream of revenue and they need an ability to regulate activities within their territory. And, by the way, they need enough territory that they can actually do something. In order to be effective, that's what governments need. If governments don't have access to that, then they're in trouble.

If you're talking about a pipeline, for example, or mining activity, the key for a government is to be interested in how much revenue is coming in, how steady is that stream of revenue, what kind of ability is there to control the activity that's under way and what kind of environmental regulatory capacity exists? I think that's the thing that a government worries about. Plus, in terms of First Nations, they say, "How many jobs are we getting? Who is being hired here? How much work do we get?''

But there are a lot of opportunities, for example, in the construction of roads. We have issues in the North. We talk about a corridor. Most of the corridor's not accessible by road. Are we going to build roads, and if we are, how do we ensure their viability?

With climate change, a lot of things are happening to the land and to the water. You have to look at yourself and ask, "Can we really build stable roads in these conditions? If we can't, what else is available? How do we do it?''

All those are questions that need to be thoroughly discussed in looking at how these things can be developed.

The Chair: I don't know but perhaps it would take companies that want to do business in a particular area — if I'm a landowner and someone wants to put an oil well in there because they think they can get oil, I own the land and I get money for it. I don't have to invest anything. I just give them the right of way and get money for it. I think that's what the First Nations want; they want to be treated like another government.

Mr. Rae: Yes.

The Chair: But you'd have to negotiate royalties. So they would either invest as governments do, or they would just take a piece of the action because they have certain proprietary rights.

Mr. Rae: To me it's about the strength of the economic partnership.

What Senator St. Germain is saying is that you need to be on the board of a company before the company will listen to you. My own view is if you're a government, you don't need to be on the board of a company for the company to listen to you. They will come and see you; they have to because you have regulatory capacity.

I come back to this question of self-government all the time and ask if we have the units of self-government. It's interesting. If you go back to the Royal Commission on Aboriginal People, the so-called RCAP, which was started by Prime Minister Mulroney and reported under Prime Minister Chrétien, they put this question of self-government front and centre in their recommendations. That's why we also negotiated self-government as a principle of constitutional change in the Charlottetown agreements in 1992. I was present at the creation of the agreements and I presided over the funeral at the end of the referendum. It's not as if this idea hasn't been around for quite a long time.

The challenge with self-government is we don't have the right geography in terms of how self-government will operate. If you have 640 separate little bands of 400 and 500 people, it's very difficult to say that is the government that's going to run the health care system and run the education system. You have to create bigger units. I'm not always the most popular lawyer when I say this to people: You have to be part of a bigger unit because that's how you're going to develop the scale and capacity to be able to actually deliver the services and be able to create the means of self-government. That's something that we need to wrestle with.

There are some people who say, "Well, because of the Indian Act, we can't get there. Forget it. We're not going to do that.'' My view is that we can't afford to ignore the long-term objective of self-government because it's such a critical part of what it means to be an autonomous person. You really need to have a capacity to make decisions.

The evidence is very clear that those communities that have more self-government actually have better conditions. You could look at the United States examples, for instance. I was interested in the comments that were made about comparative examples. I can assure you that Australia is not ahead of us; in many instances we can show we're actually ahead of them. We're a little bit behind New Zealand in some ways because the number of Maoris is different, the centrality of the state is different and the treaty relationship between the Maori and the Government of New Zealand is a very different situation.

But the Navajo are 260,000 people and they control land that is bigger than the size of Ireland. The Navajo have self-government. They have higher rates of success in high school. They have higher rates of success in university. They have greater capacity.

In British Columbia, we can point very clearly to it. Studies have been done that show that communities that actually have self-government have better outcomes. They have better results. It seems to me as a federal country where the provinces are self-governing and the federal government is self-governing and we're all connecting with each other, we ought to be flexible enough to say, "Well, let's look at other units of governance and see if we can't strengthen the governance in First Nations communities and then say we will benefit ultimately from that.'' You're not going to get a comprehensive corridor solution without dealing with the governance problem.

Senator Black: To start with, premier, if I may, I want to echo what my colleague Senator Massicotte has said. The pin that you wear so proudly on your lapel is a recognition that this country thanks you for the contributions that you make every day, to this very minute, sitting here today helping us through this complicated problem, so I would like to indicate my thanks.

Mr. Rae: Thank you very much.

The Chair: He's going to want to come back.

Mr. Rae: Don't worry, there's no risk of a revival.

Senator Black: My question is this: Given all you have said and all we have heard over the last number of months, if we were to accept the premise that a northern corridor or a new national corridor is a good thing for Canada, is the answer to turn to the First Nations community across Canada and say, "It's yours; you do it''?

Mr. Rae: I don't think it can happen without the First Nations. I think the practical reality is that this committee could express that thought, but the provinces would have something to say about it because you're basically giving away what they think is theirs. I think it's a slightly more complicated process.

I would simply say this is something that requires greater study, but then it also requires a sense of, as I said, what are the human footsteps that we can take that will actually get us to a better place in 20 years than we have been and we are today?

Senator Black: And I'm trying to explore whether there is a leap.

Mr. Rae: If there's a leap, it has to be a leap that you can actually accomplish. I think that the provinces need to be engaged in this process because they have, through their sense of responsibility and their constitutional powers, a sense that they want to be involved in the resource question. Your province and the Province of Saskatchewan I suspect would have something to say about a federal government that said, "Northern Saskatchewan, you can have that and you can develop it as you wish.'' As somebody who's a strong supporter of the First Nations, I would say great, thank you, but I don't think you would be able to implement it easily.

Senator Black: I wouldn't suggest that the underlying assets would be transferred, but there would need to be some arrangement whereby the control and direction and control in mind of the initiative would be a national project of First Nations.

Mr. Rae: Yes, for the federal government to adopt that approach I think would be a great example of leadership. The challenge will be how to implement that leadership.

One of the particular challenges we face right now is the connection between walking and talking, because rhetorically we've gone quite far in terms of the language of reconciliation, the language of change, the language of transformation and so on, and that's important. It's important to have that vision, but it's also important to implement the vision and to say this is how we're going to implement it. If the first thing that happens is that you have a bunch of premiers saying, "No, it's too complicated to do that'' — I'm not singling out the provinces, but I'm just saying you really have to figure out how to actually get there.

If the federal government were to say, "We don't want an equity share in any of this and we want the First Nations to be the primary beneficiaries of the kind of development that's involved,'' I think that would be fine. The question would be, how are you going to do that? I think that's what requires a study. I don't think any of us can draw on the wall and say this is how it's going to be done.

Senator Black: Thank you very much. That is very helpful.

Senator Campbell: I echo everybody else, Bob, in my admiration for what you have done and accomplished.

Mr. Rae: You'll forgive me if I feel like I'm attending my own funeral here.

Senator Campbell: It's okay. It's the Senate, all right?

In the 21st century, how valid are the treaties that were done in the 1800s?

Mr. Rae: It's interesting, the treaties. Again, this is just experientially, my sense is that there's a tension between the sense of Canadians that we are all treaty people, or most of us are treaty people — certainly in Ontario we're treaty people — and the First Nations' insistence that that's the case and that they are treaty people, and how the treaties have been interpreted by the Crown up until now. That's the tension.

If you say to me, how valid are the treaties, I think the really critical question is this: Is it conscionable for the Crown to continue to use the treaties as a way of denying the rights of First Nations to participate in their own self-government? That's where I have a problem with how the Crown has gone forward. That's why I think we all struggle to say that the treaties need to be renewed; we need to breathe life into the treaties; we need to find ways of expressing the treaty relationship.

One quite astute lawyer said to me once, "The trouble is, the First Nations interpret the treaties as a marriage relationship, as the creation of a relationship; and the Crown, so far, governments, have interpreted the treaties as a divorce settlement.'' They say, "You get this, we get that, good-bye.'' The First Nations are saying, "Wait a minute, we thought we had a relationship. We thought it was based on sharing. We thought it was based on greater understanding.'' I think that's not a bad way of trying to understand the tension that exists.

My own view is that if it ever were to come to a court case, as I say, inequity, I think you would have a very hard time saying that the hard-edged interpretation of the treaty by the Crown in exacting a surrender is the way to go.

As a matter of policy, the federal government could say, I believe that they should say, "We don't actually require a surrender of title for us to have a relationship.''

Senator Campbell: Something that we haven't addressed here, that I can remember, is the effect of outstanding land claims. I don't know what they are now. This isn't being critical, but when the GST was dropped by two points, it was interesting. I was on the Aboriginal Committee. The two points generated about $6 billion. The land claims treaties, to clear them all was $6 billion. I remember that clearly. So we're talking about this, but in the middle of this, over and above the treaties, we have all of these land claims that haven't been settled all the way across, and lots of them are up in that corridor, I believe.

Mr. Rae: Yes, they are.

Senator Campbell: What do we do about that?

Mr. Rae: That's an issue. The major land claims that involve large tracts of land and multitudinous billions of dollars are in the non-treaty parts of the country. Then there is a specific claims process that involves the adjustment of reserve borders and boundaries and looks more within the treaties and whether there is a way of dealing with this. The claims process is different.

Going back to the mid-1970s when the Calder case came down, Mr. Trudeau Sr. had to do a 180 turn because he had originally been an advocate of the white paper which essentially said, "We're out of here. The Indian Act is an abomination. It's an act of paternalism. We have got to get rid of it. We are prepared to negotiate with the provinces and make sure that everybody remains whole, but essentially, communities, you are on your own and you are reverting to the relationship with the province.'' That was rejected powerfully by the First Nations.

Ultimately, what drove the change in government policy was the Calder case which said, "Well, we really don't know where the title is right now in a lot of the contested land.'' So government said, "We're going to have to create a new process. We're going to have to take a different approach.'' And to give him credit, Mr. Trudeau said, "Okay, that was then, this is now, and we're going to have a claims process.''

Then you had the additional reality of the patriation process that I was also present for when section 35 was brought in. When section 35 was brought in, at the insistence of the First Nations, I don't think the federal government or the provinces appreciated what the implications of section 35 would be.

The Chair: Even on self-government and all these other issues, as you say and as Senator St. Germain said, we have 625-and-some Indian nations in the country. They don't all get along. Some are very successful, some have economic success, educational success on their reserve and everything is going great for them, and then others are living in poverty and can't seem to get a leg up.

In B.C. they have overlapping claims. They are fighting amongst themselves about who owns what. They can't clear that mess up.

Mr. Rae: No, but we do need a process that does deliberately attempt to clear that up. We do need to clear it up.

The Chair: Yes.

Senator Campbell: To be fair, in B.C. there are overlapping claims with three First Nations, but they work together. We have seen that with the defence lands. They are working together. Because they are overlapping doesn't necessarily mean there's not a solution. They are working towards that solution, at least in B.C.

Mr. Rae: Just to continue the conversation — and I like the back and forth. It takes me back to the brief period in which I so-called ran a caucus, insofar as one can run a caucus.

The critical thing to remember, senator, is that the term "First Nations'' really doesn't give you a full texture of the indigenous nature of the country. The Plains Cree are a different people from the Ojibwa of northern Ontario. In northern Ontario you have the James Bay Cree coming over from Quebec that are on the coast of Hudson's Bay and James Bay. Then south of that you have Ojibwa Cree and Ojibwa, and across the country you have different language groups and cultures from Labrador to the Yukon. You have all kinds of different groups and different groupings. Culturally, you have profound differences.

You also have differences of economic condition that stem from where people are. If you are right next to a mining development or — and the evidence is very clear about this — if your reserve is near a city, your education results will likely be better and your condition will be better. You will have had 100 to 150 years of people getting jobs, getting work, subcontracting, being involved in businesses and all kinds of things.

If you are in a remote community in the middle of northern Manitoba or northern Ontario, people say, "Well, you know, you're not doing very well.'' You say, "How the hell would anybody do well in those circumstances?'' Economics requires opportunity and a chance. Of course things aren't great because people have not been given the ability to get the revenue that would come from any development and they haven't been allowed to take advantage of that opportunity.

I think you need to see that the glass is either half full or half empty, depending on your nature. I'm a half-full guy. I think that we have made a lot of progress. We have a long way to go.

Senator Smith: Sir, the government spends about $10 billion either directly through Indigenous and Northern Affairs or horizontal relationships with other departments. One of the recommendations we may probably make is to do a study.

The University of Calgary visited us and showed us the program that they put together. We're looking at probably $800,000 to $1 million.

Where would you go to get the seed money? To the government or try to get a combination of provincial money? How do we kick-start to get a pulse in terms of the actual study? Based on your experience, how do we do that?

Mr. Rae: Let me say that first of all we don't have a lot of independent sources of information about what I would call the indigenous condition and the condition of indigenous finances and the condition on reserve. People talk a lot about the money, but let's also understand that the Parliamentary Budget Officer reported yesterday that on-reserve funding for education is several thousand dollars per student short of what would be spent in a neighbouring — not the South — community next door but one that is governed by the province.

You then have to look at the condition overall of where provincial transfers fit in. We're spending money, but what exactly are we getting? Why is it that conditions are where they are in certain communities and are better in others?

Is there one place that can provide this information? I have actually been doing quite a lot of work, partly through my teaching at the university, in trying to figure out why we don't have more information about this, even about outcomes. We know very little about outcomes compared to other jurisdictions.

It has always astonished me that in government you can spend a ton of money on running stuff and keeping our hospitals going and everything else. We don't do a very good job of evaluating the results of spending all this money. How does it connect to outcomes? And if the outcomes are really bad, that doesn't necessarily lead to one answer, but then forces you to say, "Why are we facing this challenge?'' That's another means of inquiry.

I don't think you should have to chase around for the money. The reality is that it's the obligation of government, if they think it's a worthwhile project, to say it should be funded. I think there would be a lot of interest in a number of foundations and others in asking why we wouldn't be trying to get more information that would actually allow us to reach certain conclusions about where things are going.

I have to say that the argument that I've heard many times is about how — I think I heard the phrase used today — we're throwing money at the situation. We need to understand the nature of the deficit that the First Nations communities are in. It's not just a financial deficit, although in many cases it is. How many of the communities are in third-party management? How many are in co-management? How many are autonomous in terms of their ability to manage their finances?

This was the result of the system. If you were a bank, you would look at this and say, "What is going on here? Why is this happening?'' I don't see any systematic study in government. If I was premier again and half of the municipalities were in co-management, I would say there's something wrong with the system. It's not their fault. Something is not working in how we're doing things leading to this result.

We need to be very blunt and direct about figuring out what the failure is here. This is a dialogue that needs to happen.

The Chair: Thank you very much, Mr. Rae.

Mr. Rae: Thank you. It is a pleasure being back on Parliament Hill.

The Chair: Thank you for your contribution to the country. It's nice that people like you get involved in the political game. It is very much appreciated.

(The committee adjourned.)